6 months ago
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The SEC faces backlash after threatening legal action against Robinhood.
John Rose, US Representative serving Tennessee’s Sixth Congressional District, is strongly critical of the US Securities and Exchange Commission’s (SEC) actions against Robinhood. The Congressman called the SEC and its Chair, Gary Gensler “rouge regulators” in a recent post on X.
According to him, the federal agency went beyond its intended role of protecting investors and maintaining fair markets. He believes that instead of stifling innovation, the SEC should prioritize investor protection.
“The [SEC] exceeded its mandate to protect investors and maintain fair, orderly markets by issuing a Wells Notice to [Robinhood App], a precursor to enforcement action,” the Congressman criticized.
“I’m proud to help lead the effort to provide clarity by passing the FIT for the 21st Century Act so that rogue regulators like [Gary Gensler] can focus on their mandate to protect investors and not disrupt innovation,” he added.
The SEC is under fire after threatening enforcement action against Robinhood’s crypto arm. Rose is among a number of high-profile figures to have voiced strong opposition to the agency’s move.
Jake Chervinsky, Chief Legal Officer at Variant, also took to X to express his perspective.
The SEC has issued an unusually high number of Wells Notices related to crypto in recent months. However, Chervinsky believes the SEC is misusing the Wells Notice process by using it as “a scare tactic” to pressure companies.
“The number they’ve sent about crypto in recent months is astonishing. It’s hard to imagine that they would (or could) bring so many enforcement actions at once,” Chervinsky stated. “It seems like they’re abusing the Wells process as a scare tactic now.”
“If the SEC brings as many enforcement actions as it has sent Wells notices, it will be in flagrant violation of both the law and its Congressional mandate. If not, it’s clearly abusing the Wells process to get free discovery and terrorize upstanding US companies,” he added.
Chervinsky argued that the SEC is focusing too heavily on crypto regulation, neglecting its core responsibility of regulating traditional equity and debt markets. He noted that this focus is a waste of taxpayer resources that could be better spent on the agency’s core duties.
“The SEC allocates a grossly disproportionate amount of its resources to crypto, given that its actual purpose is to regulate equity and debt markets. Every minute and taxpayer dollar spent on crypto is one not spent on the real mission that Congress created the SEC to pursue,” Chervinsky stated.
Under the leadership of Chairman Gary Gensler, the SEC has been actively pursuing legal actions against a range of prominent individuals and organizations within the industry.
Following lawsuits against three leading crypto exchanges—Coinbase, Kraken, and Binance—the SEC continues to expand its targets to include new crypto-related entities such as Consensys, Uniswap Labs, and Robinhood.
Ripple Labs, a previous major target of the SEC, has been one of the few entities to achieve a partial victory against the agency.
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